It is very important for any credit control or management department to be effective, there should be institute a credit policy and procedures manual.
So what should be in the content of such a credit policy and procedural manual? A good Credit Policy and Procedures Manual should contain the following:
- A clear statement of credit policy,
- Credit terms,
- Conditions of sale,
- Cash discounts,
- Methods of payment for various types of account,
- Procedures for
- opening of accounts,
- account collection,
- credit sanctioning,
- legal action,
- disputes,
- bad debts,
- stopping the supply of goods to a customer,
- credit limits (including extension of new credit limits whether higher or lower amount),
- export collection,
- credit insurance,
- specimens of management information forms and reports and the timeline,
- standard letters.
Continue reading Salient Features of a Good Credit Policy and Procedures Manual
FCCA,CA(MIA)with more than 26 years of post-qualifying working experiences. Previous working stints with one of the big accounting four, Regional GFC & Group Treasurer in a group of Malaysian and Group CFO in Singapore public listed concern.
Also author to another very popular free educational accounting cum finance blog: http://basiccollegeaccounting.com under the branding of College Accounting Coach.
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